A terrific development. CMS is allowing Tennessee to choose not to include certain drugs on its formularies. This is a simple and obvious market-based reform. I'll explain why. statnews.com/pharmalot/2021… via @statnews
If you follow health policy, you've heard of "essential health benefits," the Obamacare mandate that every insurer cover a certain set of federally-prescribed benefits. Medicaid is even worse—it mandates coverage of *every* FDA-approved drug, irrespective of its price or utility.
Because the Medicaid drug coverage mandate, euphemistically called an "open formulary," forces states to pay for every FDA drug, companies could charge whatever they want for their drugs, effectively treating taxpayers like ATMs.
The policy response all along should have been to give states the option to choose *not* to include certain drugs on their formularies: a simple form of price negotiation. But because the drug lobby adamantly opposed that, instead we got a clunky system of govt.-designed rebates.
Singapore, notably, uses the Tennessee approach to great success: reimbursing for a narrow set of essential, low-cost or high-value drugs on formulary, and leaving high-cost, low-value drugs off. freopp.org/what-medicare-…
Rest assured your favorite drug lobby, which purports to be all about free markets and against socialism, will be up in arms about CMS's move, which gives states the flexibility *not* to be forced to pay for the industry's products.
The next step should be to do the same in Medicare Part D. Part D has "protected classes" of drugs under which insurers are forced to cover drugs in 6 categories irrespective of their price or value, driving premiums skyward. The usual corporate socialists have blocked reform.
I wrote about “protected classes” in Medicare Part D, and industry efforts to block reform, at @Forbes: forbes.com/sites/theapoth…
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